How the Affordable Care Act Will Help Early Retirees

About 170 million Americans have health insurance tied to their jobs, according to the latest U.S. Census data. The cost of their insurance is usually subsidized by their employers, they get access to lower group rates, and they cannot be denied coverage due to pre-existing conditions.

The link between health insurance and employment acts as a major obstacle to anyone contemplating early retirement. People retiring early are usually thrown into the harsh individual insurance market where there are no employer subsidies and no access to group rates. Since early retirees are usually in their 50s or early 60s, they're also more likely to have pre-existing conditions which make individual insurance coverage prohibitively expensive or even unavailable.

The Affordable Care Act will help early retirees by addressing each of the major problems faced by early retirees currently attempting to find affordable health insurance coverage in today's harsh individual marketplace.

Under the Affordable Care Act, early retirees will have guaranteed access to a group health plan. The premiums faced by early retirees will be lowered by the inclusion of younger and healthier people in the pool of the insured, since the Affordable Care Act will use tax penalties to encourage every American to have health insurance coverage. There are also limits on how much the plans can discriminate based on age, which will help lower the premiums of the (typically) older early retirees.

Every health care plan offered under the Affordable Care Act will be prohibited from denying coverage or discriminating against people who get sick or have a pre-existing condition. This prohibition will alleviate the frustrations faced by today's early retirees attempting to get affordable coverage, which typically include filling out detailed medical history disclosure forms. This prohibition will be particularly advantageous for early retirees since they often have more pre-existing conditions to their higher ages.

The Affordable Care Act will provide premium subsidies for lower and middle income early retirees. Early retirees with modified adjusted gross incomes (MAGI) of less than $14,856 (for singles) or $20,123 (for married couples) will be eligible for Medicaid coverage, if their state participates in the Medicaid expansion component of the Affordable Care Act. Early retirees making more than these amounts but less than $44,680 (for singles) or $60,520 (for married couples) will be eligible for premium subsidies used to pay for health insurance. These subsidies will help offset the loss of employer-provided health insurance subsidies for early retirees.